Kodak stock plunged 30% Monday after a $765 million loan from the US government to help make drug ingredients was put on hold, as regulators are reportedly looking into allegations of insider trading.
The stock was temporarily halted after plunging as much as 43% earlier in the day.
“Recent allegations of wrongdoing raise serious concerns,” the US International Development Finance Corporation said in a tweet Friday afternoon. “We will not proceed any further unless these allegations are cleared.”
The DFC’s announcement came a few days after questions arose about heavy trading volume for Kodak’s stock, which soared as much as 2,757% following the initial July 29 announcement.
Kodak executives including CEO Jim Continenza are also facing criticism for receiving stock options on July 27, a day before the loan announcement.
White House Press Secretary Kayleigh McEnany on Monday would not say whether President Trump will pull the plug on a recent deal with Kodak, but said he takes allegations of insider trading against the company “very seriously.” She added that the president has “strong faith in the process” and that the administration will not proceed until the allegations are cleared.
Last week the Wall Street Journal reported the Securities and Exchange Commission is investigating why Kodak announced the loan on the day prior to the official announcement, which sent shares 25% higher. The Journal said a local TV station in Kodak’s home of Rochester, New York, published a media advisory about the upcoming announcement, adding that the station had not been given an embargo on the news.
The $765 million loan was meant to launch Kodak Pharmaceuticals, which will produce generic active pharmaceutical ingredients to reduce America’s dependency on foreign drug makers. The company would hire some 350 workers, most in New York state, and create approximately 1,200 indirect jobs.
Kodak didn’t immediately respond for comment.
